Aging Consumers To Rework Health Industry

Health industries in the 1990s will find much of their business dictated by the graying of America as middle-age and senior citizen groups grow during the next decade.

"Demographics are going to drive everything in health care," says analyst George Shipp with Scott & Stringfellow in Norfolk. The segment of the population age 85 and older will grow substantially from its 1980 total of 2.2 million - to 3.3 million in 1990 and nearly 5 million by the turn of the century.

In addition, the population older than 65 is growing, though not at the same rate as the over-85 group. The over-65 group, which totaled 25.5 million in 1980, will grow to 31.6 million in 1990 and 34.9 million in 2000.

Nursing homes, whose growth in recent years have been slowed due to heavy regulation requirements, should find themselves in a boom time.

Michael Beall, research director with Richmond's Davenport & Co., says the 1990s could be profitable not only for nursing and retirement homes, but for assisted-living communities. Assisted-living facilities care for people who need someone to look after them but don't need a doctor.

During the next decade, the nation must come to grips with a burgeoning elderly population looking at a shrinking base from which to pay the bills.

Already, 37 million Americans do not have health insurance coverage, and socializing the medical services has been proposed.

"The cost of health care is just too high," he says. "Something will be done. Something is going to change because the forces are just massive."

Peggy Cooning, spokesperson for the Virginia Hospital Association, says that while surveys show that Americans think health care is a right, the country is at a point where it has to consider rationed health care. There may be segments of the population to whom the system provides a basic level of health care, but nothing beyond.

While socialized medicine is an option, Cooning thinks it would be an uphill battle to expect Americans to pay more taxes to support such a program. "I don't know if in 10 years we'll see socialized medicine," she says.

"We're going to have to make some tough decisions as to what we want," Cooning says. "We can't wait until a crisis happens."

One saving grace for the growing elderly population is that they will be more affluent than their predecessors, though Shipp notes that these people did not save their money to use it on health care.

Hospitals will face tough financial times during the 1990s.

Cooning also predicts "challenging" times ahead for hospitals. Most at risk are those located in rural and inner city areas, she says, because they provide care to the largest portion of patients that can't pay.

Rick Pearce, senior vice president with Riverside Health System, says one-third of Virginia's hospitals operated in the red the past two years.

"You're starting to see hospitals declare bankruptcy, and I think you'll see a lot more of that," Pearce says.

"I think the cost issue has almost come to a head now," Cooning says. "What concerns me is, what about the human side? Who will not receive care?"

People who do have health insurance are likely to pay more in the '90s. From an employees standpoint, "you and I will continue to pay more," while employers will pay a smaller percentage, Shipp says.

While the outlook may sound bleak, Shipp says it wasn't necessarily so. "We just can't afford as individuals, employers and as a country to pay much more" for health care, he says. "The system is stretched, basically."

Other health-care trends affecting consumers include:

* Biotechnological growth.

* Off-the-shelf diagnostic tools improvements.

* Baby boomers: elective surgery.

HEALTH TRENDS OF THE '80S

Health facts from the 1980s, provided by the American Hospital Association unless otherwise noted:

* 1986 marked the first time in history more people used community hospital outpatient services (231.9 million visits) than stayed in the hospital itself (229.4 million inpatient days). Outpatient visits increased from 273 million in 1983 to 336 million in 1988.

* Acquired Immune Deficiency Syndrome (AIDS) cases topped 100,000 in September 1989. More than 62,000 people have died from the disease.

* Managed care programs - health maintenance organizations and preferred provider organizations - now cover 30 percent of all people with employer-sponsored health insurance, and more than 1.8 million Medicare beneficiaries.

* Nearly 450 community hospitals closed during the 1980s, including 83 in 1988.

* Figures provided by the Virginia Hospital Association show that average length of stay in Virginia hospitals dropped 11.85 percent from 1982 to 1988, to 6.99 days. The U.S. average for 1988 was 7.21 days.

* The segment of the U.S. population older than 85 years old is expected to increase from 2.2 million in 1980 to nearly 5 million in 2000, according to statistics provided by the brokerage firm of Scott & Stringfellow in Norfolk.

* The average cost to Virginia hospitals to provide care by patient day totaled $475.65 in 1987, the most recent figures available from the Virginia Health Services Cost Review Council. By comparison, it cost Virginia hospitals an average of $282.10 by patient day to provide care in 1982. In 1987 there were 28 states with higher cost-per-day totals than Virginia.

* The same report from the Virginia Health Services Cost Review Council showed cost to Virginia hospitals per admission in 1987 equaled $3,357.79. The District of Columbia ranked first at $5,636.28.